Global Outsourcing Leader, Luxoft, Announces 2010 Industry Predictions

LONDON, December 1 - Luxoft, a leading global provider of advanced application and product
development services, today has issued their predictions for the outsourcing
industry in the coming year. The current state of the economy has hit hard
many industries and business, forcing them to rethink their outsourcing
strategy and budgets. Taking the current economy and future expectations into
consideration, Luxoft has compiled their insights for the outsourcing
industry in 2010.

Year 2010 will mark the beginning of the economic recovery. The demand
for IT outsourcing services will continue to rise with increased number of
outsourcing deals in the second half of the year. Nevertheless, management
tactics that were used during times of economic hardship will remain
applicable.

"More for Less" Outsourcing Approach to Continue Into 2010

2009 has been a year of significant budget and staff cuts to keep revenue
from dropping drastically. With the volume of work remaining the same,
organisations are faced with tremendous pressure to stay competitive and
achieve the best possible value from all initiatives - all with limited IT
budgets. Outsourcing is being used to enable business growth under strict
economic conditions. Achieving "more for less" became a trend that will
continue into 2010. It has led to adoption of more mature service models,
where the service provider is expected to take on more responsibility and
more risk. Complexity of outsourced projects is rising with more core work
being outsourced, faster turnaround times, and domain expertise becoming a
'must have'.

Tight Budgets Dictate Increased Transparency

2010 will bring on a slow increase in IT budgets; however they will
remain under tight control. To help control budgets, outsourcing clients will
demand more line of site and visibility into projects. By increasing their
knowledge of the day-to-day activities on the project, clients will be able
to make decisions faster, increase the workflow and ensure budgets are met.
Sourcing contracts and projects will also be fast tracked for quicker
turnaround times and more precise actions, contributing to a manageable
bottom line.

Change of Focus and Incentives

In the current economic environment companies will shift their focus away
from long-term contracts to project-based assignments that will deliver
tangible results within a shorter timeframe. In the process they will also
consolidate their vendor portfolios, turning to a short list of strategic
vendors versus employing hundreds of different vendors. By becoming more
strategic in their vendor choices, companies will be able to ensure projects
are in line with company expectations and deliverables. Outsourcing providers
who can link business and IT strategies and plans will come out ahead.
Results will be the main focus of payment, not the effort put into each
project.

Location, Location, Location

Eastern Europe remains to be a premium nearshore destination for European
clients. Strong engineering talent combined with ease of travel, cultural
affinity and closer time zones make Eastern European vendors a more viable
outsourcing option. Quality of work, especially for complex outsourcing
assignments, will keep Russia as a premier destination for that segment.

"Recession-proof" Vendor Attributes

Luxoft recently polled a selection of its customers to determine if the
current state of the economy has caused changes in the client's expectations
for their vendors, as well as any changes in the service provider selection
criteria. Despite cost cutting pressures, technical skills and cultural fit
were determined to remain a top priority when choosing an outsourcing
provider. In addition, thought leadership is becoming increasingly important
and is quickly being considered a key requirement alongside technical and
industry expertise and price.

"Curve Out" Deals

"Curve out" is a new type of outsourcing deal that is currently emerging
on the market and will grow in the year to come. "Curve out" involves
outsourcing of an entire product or service unit. A company might shut down a
particular operation to remain cost competitive, but want to keep it in its
portfolio. An outsourcing vendor would then be invited to take over the
operation, while providing a competitive, well balanced pricing structure.
This formula plays out well both for the client and the vendor: the client is
able to retain the operation at the same time allowing the vendor to
commercialise it for its own purposes.

"Hot" Areas for 2010

In the New Year, there will be a few key areas that will increase demand
for outsourcing services. Investment banking is a very dynamic industry with
a number of new government regulations being imposed upon companies at a
rapid pace. Due to this increase in regulations, many of the systems
currently in place will have to be changed in accordance to these new
standards.

Another "hot" area for 2010 will be in the energy field. With the notion
of "smart-energy" becoming vastly important in the next few years, the demand
will rise in the area of renewable energy technology development. Companies
that possess expertise in the development of smart devices will be ahead of
the game.

2010 will be the year of technological advancements in the social media
space as well. We will see less restrictive Social Media Application
Programming Interfaces. More and more social media companies will be allowing
developer companies to make use of existing functionality. Thus, there will
be a whole new wave of mobile and web applications that will add on to the
functionality of social networks. These new applications and platforms, along
with further improvements in RFID tags and Natural Language Processing
technologies, will bring the world of social media onto a higher level.

Cloud computing, especially SAAS applications and cloud platforms from
Amazon and Google, will establish itself as an important platform for the
outsourcing industry. Many companies are already increasing their use of
cloud computing and will continue to expand these services as more companies
realise the cost cutting benefits of working in the cloud and how it can aid
their recovery from the economic crisis. Cloud computing is going to become
increasingly important for the outsourcing industry in the areas of
client-vendor relationships and communications.

An accelerated shift to business process driven software architectures
such as SOA will demand outsourcing companies establish hi-end practices
around off-the-shelf component suppliers in the areas of SOA Middleware, BPM,
Business Intelligence and specifically in-memory analytics and Data
Integration. Emerging technologies that enable real-time, automated decision
support, such as Complex Event Processing (CEP), will become more widespread
and will promote new types and methods of designing software systems that
require tighter understanding of business domain and the ability to work with
business decision makers.

About Luxoft

Luxoft, a member of the IBS Group, is an emerging global leader in
application and product engineering outsourcing services for enterprise IT
organisations and software vendors. Luxoft builds lasting partnerships with
its clients, such as Boeing, Deutsche Bank, UBS, Dell, IBM, Sabre and other
global leaders, based on the culture of engineering excellence, innovation,
and deep domain expertise. Luxoft offers global delivery capability through
its network of state-of-the-art delivery centres in North America, Central &
Eastern Europe, and Asia. Luxoft`s customers benefit from the right mix of
technology skills, industry knowledge, best-of-breed processes and
methodologies, and a choice of engagement models.

Luxoft has been awarded the #1 position in the "Emerging European
Markets" category of the 2009 "Global Services 100" list. Company is also a
recipient of the Applied Innovation Award from the IAOP and Wipro, ITAA and
Forbes (together with Deutsche Bank).

    Olga Bokhonovskaya
    Marketing Director, Luxoft
    +7(495)967-8030 ext 4431
    OBokhonovskaya@luxoft.com

Olga Bokhonovskaya, Marketing Director, Luxoft, +7(495)967-8030 ext 4431, OBokhonovskaya at luxoft.com